1. Lecture 2 Laura Grazzini laura.grazzini@unifi.it
Consumer Behaviour
Lecture 2
Laura Grazzini

2. Learning Objectives
The three different decision making perspectives (cognitive, habitual and affective)
Types and role of consumer involvement
Cognitive decision making (information-processing perspective)
Habitual decision making (choices made with little or no conscious effort)
Affective decision making (driven by our emotional responses to products)

6. The three types of decision making

8. Consumer involvement
Involvement is defined as ‘a person’s perceived relevance of the object based on their inherent needs, values, and interests’. The word object is used in the generic sense and refers to a product (or a brand), an advertisement, or a purchase situation. Consumers can find involvement in all these objects. Involvement can be viewed as the motivation to process information. To the degree that there is a perceived linkage between a consumer’s needs, goals or values and product knowledge, the consumer will be motivated to pay attention to product information.

9. Consumer involvement

11. Types of consumer decisions
One way to characterize the decision-making process is to consider the amount of effort that goes into the decision each time it must be made. Consumer researchers have found it convenient to think in terms of a continuum, which is anchored on one end by habitual decision-making and at the other extreme by extended problem-solving.

12. The three types of decision making
Limited problem-solving is usually more straightforward and simple. Buyers are not as motivated to search for information or to evaluate each alternative rigorously. People instead use simple decision rules to choose among alternatives. These cognitive short cuts (more about these later) enable consumers to fall back on general guidelines, instead of having to start from scratch every time a decision is to be made.
Habitual decision-making; this refers to decisions that are made with little or no conscious effort. Many purchase decisions are so routinized that we may not realize we’ve made them until we look in our shopping trolleys. We make choices characterized by automaticity with minimal effort and without conscious control.

13. Five types of perceived risk

14. Cognitive decision making
A cognitive purchase decision is the outcome of a series of stages that results in the selection of one product over competing options. Consumer researchers have approached decision-making from a rational perspective. In this view, people calmly and carefully integrate as much information as possible with what they already know about a product, painstakingly weighing the pluses and minuses of each alternative, and arriving at a satisfactory decision.

21. Stage 1: Problem recognition
It occurs when consumer sees difference between current state and ideal state. The consumer perceives there is a problem to be solved, which may be large or small, simple or complex.
Need recognition can occur in several ways. The quality of the person’s actual state can be diminished simply by running out of a product, by buying a product that turns out not to satisfy needs adequately.
Opportunity recognition occurs when a consumer is exposed to different or better quality products.

22. Stage 2: Information search
Once a problem has been recognized, consumers need adequate information to resolve it. Information search is the process by which the consumer surveys his or her environment for appropriate data to make a reasonable decision.

23. Stage 2: Information search
How much search occurs? As a general rule, search activity is greater when the purchase is important, when there is a need to learn more about the purchase, and/or when the relevant information is easily obtained and utilized. Consumers differ in the amount of search they tend to undertake, regardless of the product category in question.
Search tends to be greatest among those consumers who are moderately knowledgeable about the product. There is an inverted-U relationship between knowledge and external search effort. People with very limited expertise may not feel they are capable of searching extensively. In fact, they may not even know where to start. The type of search undertaken by people with varying levels of expertise differs as well. Because experts have a better sense of what information is relevant to the decision, they tend to engage in selective search, which means their efforts are more focused and efficient. In contrast, novices are more likely to rely on the opinions of others and to rely on ‘non-functional’ attributes, such as brand name and price, to distinguish among alternatives.

24. Stage 2: Information search
How much search occurs? Purchase decisions that involve extensive search also entail some kind of perceived risk, or the belief that the product has potentially negative consequences. Perceived risk may be present if the product is expensive or is complex and difficult to understand, or if the brand is unfamiliar.
Figure 8.5 lists five kinds of risk – including objective (e.g. physical danger) and subjective factors (e.g. social embarrassment) – as well as the products that tend to be affected by each type. As this figure notes, consumers with greater ‘risk capital’ are less affected by perceived risks associated with the products. For example, a highly selfconfident person would be less worried about the social risk inherent in a product, whereas a more vulnerable, insecure consumer might be reluctant to take a chance with a product that might not be accepted by peers.

26. Stage 3: Evaluate alternatives
How we decide? In some cases, there may be literally hundreds of different brands or different variations of the same brand, each clamoring for our attention. Evoked set (the alternatives a consumer knows about) Consideration set (the ones actually considered)
Consumer engaged in extended problem-solving may carefully evaluate several brands, whereas someone making a habitual decision may not consider any alternatives to their normal brand. Furthermore, some evidence indicates that more extended processing occurs in situations in which negative emotions are aroused due to conflicts among the choices available. The alternatives actively considered during a consumer’s choice process are his or her evoked set. The evoked set comprises those products already in memory (the retrieval set), plus those prominent in the retail environment. The alternatives that the consumer is aware of but would not consider buying are his or her inept set, while those not under consideration at all comprise the inert set.

28. Stage 4: Purchase decision
Once the relevant options from a category have been assembled and evaluated, a choice must be made among them. Evaluative criteria are the dimensions used to judge the merits of competing options. Another important point is that criteria on which products differ from one another carry more weight in the decision process than do those where the alternatives are similar. The attributes actually used to differentiate among choices are determinant attributes.

29. Example: Evaluating alternatives for a tv set

30. Stage 4: Purchase decision
Consumers consider sets of product attributes by using different rules, depending on the complexity of the decision and the importance of the decision to them. Under conditions of high cognitive involvement, people tend to think carefully about the pros and cons of different options. When the consumer makes habitual or emotional decisions he probably uses a non-compensatory rule. In this case if an option doesn’t suits him on one dimension, the consumer just reject it.

31. Stage 5: Post-purchase evaluation
Post-purchase evaluation represents the true test for the entire decision making process. It occurs when consumer experiences the product or service selected and decides whether it meets his expectation. The level of consumer satisfaction or dissatisfaction plays a big role in his future behavior.

32. Habitual decision making
Consumers don’t undergo all the steps of cognitive decision making every time they buy something. This refers to decisions that are made with little or no conscious effort. Many purchase decisions are so routinized that we may not realize we’ve made them until we look in our shopping trolleys. We make choices characterized by automaticity with minimal effort and without conscious control.
The development of habitual, repetitive behaviour allows consumers to minimize the time and energy spent on mundane purchase decisions. On the other hand, habitual decision-making poses a problem when a marketer tries to introduce a new way of doing an old task. In this case consumers must be convinced to ‘unfreeze’ their former habit and replace it with a new one – perhaps by using an ATM machine instead of a live bank teller, or switching to self-service petrol
pumps instead of being served by an attendant.

33. Heuristics: mental shortcuts
We often fall back on other shortcuts to simplify our choices: heuristics. These mental rules of thumb range from the very general to the very specific. Few of the most prevalent heuristics we commonly use are:
Especially where limited problem-solving occurs prior to making a choice, consumers often fall back on heuristics, or mental rules-of-thumb that lead to a speedy decision. These rules range from the very general (‘Higher-priced products are higher-quality products’ or ‘Buy the same brand I bought last time’) to the very specific (‘Buy Silver Spoon, the brand of sugar my mother always bought’) them to use some dimensions as substitutes for others.
COVARIATION: One frequently used short cut is the tendency to infer hidden dimensions of products from observable attributes. The aspect of the product that is visible acts as a product signal that communicates some underlying quality. When product information is incomplete, judgements are often derived from beliefs
about covariation, or perceived associations among events that may or may not actually influence one another. For example, a consumer may form an association between product quality and the length of time a manufacturer has been in business.
The assumption of a price–quality relationship is one of the most pervasive market beliefs. Novice consumers may in fact consider price as the only relevant product attribute. Experts also consider this information, although in these cases price tends to be used for its informational value, especially for products (e.g.
virgin wool) that are known to have wide quality variations in the marketplace.
COO: In general, people tend to rate their own country’s products more favourably than do foreigners, and products from industrialized countries are rated better than are those from developing countries. A product’s country of origin in some cases is an important piece of information in the decision-making process. A product’s origin, then, is often used as a signal of quality. Certain items are strongly associated with specific countries, and products from those countries often attempt to benefit from these linkages. Countries, in their turn, can be very protective of product names which potentially provide them with an important competitive advantage in winning customers. Country of origin can function as a stereotype – a knowledge structure based on inferences across products. These stereotypes may be biased or inaccurate, but they do play a constructive role in simplifying complex choice situations.

34. Affective decision making
We make some decisions on the basis of an emotional reaction rather than as the outcome of a rational thought process. That explains why so many marketing activities and messages focus on altering our moods or linking their products to an affective response.

35. Positive and negative affective response
Zurich – True love Save the Children Children smoke

36. SUMMARY
Consumers are faced with the need to make decisions about products all of the time. Some of these decisions are very important and entail great effort, whereas others are made more or less automatically. Perspectives on decision-making range from a focus on habits that people develop over time to novel situations involving a great deal of risk where consumers must carefully collect and analyse information prior to making a choice. A typical decision process involves several steps. The first is problem recognition, where the consumer first realizes that some action must be taken.

37. SUMMARY
Once a problem has been recognized and is seen as sufficiently important to warrant some action, information search begins. This search may range from simply scanning memory to determine what has been done to resolve the problem in the past, to extensive fieldwork in which the consumer consults a variety of sources to amass as much information as possible. In the evaluation of alternatives stage, the product alternatives that are considered comprise the individual’s evoked set. Research in the field of behavioural economics illustrates that decision-making is not always strictly rational. Principles of mental accounting demonstrate that decisions can be influenced by the way a problem is posed (called framing) and whether it is put in terms of gains or losses.

38. SUMMARY
When the consumer eventually must make a product choice from among alternatives, a number of decision rules may be used. Non-compensatory rules eliminate alternatives that are deficient on any of the criteria the consumer has chosen to use. Compensatory rules, which are more likely to be applied in high-involvement situations, allow the decision maker to consider each alternative’s good and bad points more carefully to arrive at the overall best choice. Very often, heuristics, or mental rules-of-thumb, are used to simplify decision- making. In particular, people develop many market beliefs over time.